Tourism & Hospitality Marketing - Packet 2

The Service Culture Introduction

• Some managers view operations solely as selling tangible goods.

  • Example: Fast-food managers may only focus on hamburgers, neglecting service quality which leads to poor customer retention.

• A key task for hospitality businesses is developing a strong service culture.

  • Service culture emphasizes customer satisfaction and starts from top management.

  • Business mission should contain a service vision.

  • Hiring practices should focus on employees with a customer service attitude to cultivate service excellence.

  • Effective service culture exemplified by Ritz-Carlton, where employees are empowered to deliver quality service.

Characteristics of Service Marketing

• Four key characteristics of services:

  1. Intangibility

  • Services cannot be seen, tasted, felt, or smelled (e.g., airline tickets do not guarantee a tangible experience).

  • Customers leave with memories rather than physical products.

  • To ease buyer uncertainty, tangible evidence (e.g., cleanliness of a restaurant) reassures quality perception.

  2. Inseparability

  • Service transactions involve both customer and provider's presence.

    • Example: Poor service attitude negatively impacts customer experience regardless of food quality.

  • Customers are actively involved in service delivery; thus, managing customer behavior is essential.

  • Example: Training customers in using hotel services enhances their experience.

  3. Variability

  • Service experiences can differ greatly; consistency is crucial for customer retention.

    • Example: Unpredictable food quality leads to dissatisfaction.

  • Steps to reduce variability:

    • Invest in hiring and training

    • Standardize service performance

    • Monitor satisfaction and feedback.

  4. Perishability

  • Services cannot be stored (e.g., unsold hotel rooms cannot be sold later).

  • Airlines may charge no-show fees to recover potential lost revenue.

Management Strategies for Service Businesses

• Good service firms utilize marketing to create strong positioning in their target markets.

• Effective interaction between customers and service staff is critical for successful service delivery.

• Service-Profit Chain: Links profits with employee and customer satisfaction across five crucial links:

  • Healthy profits and growth

  • Satisfied and loyal customers

  • Increased service value

  • Productive service employees

  • High internal service quality

Service Marketing

• Service marketing exceeds traditional four P's; it includes:

  • Internal Marketing: Training and motivating employees to work together for customer satisfaction.

  • Interactive Marketing: Quality perceived depends on service encounter and interaction.

Managing Differentiation

• Customers view similar services as interchangeable; differentiation reduces price sensitivity.

  • Companies can innovate in three main areas:

    • People: Skilled customer-contact staff

    • Process: Streamlined service delivery

    • Physical environment: Superior service setting

Managing Service Quality

• Higher quality than competitors draws loyal customers.

  • Service quality is linked to customer expectations based on experiences and advertising.

  • Customer retention indicates quality; businesses must consistently meet or exceed expectations.

Resolving Customer Complaints

• Problems can arise despite best efforts; recovering from a service failure can enhance loyalty.

  • Empower frontline employees to resolve complaints effectively and swiftly.

  • Most customers do not complain; management must encourage feedback for future improvement.

Tangibilizing the Product

• Use promotional materials, employee appearance, and environment to physicalize service offerings.

  • Example: hotel brochures and well-groomed staff enhance customer confidence.

Managing Perceived Risk

• Address customer anxieties by offering low-risk first-time experiences.

• Establishing familiarity through fam trips for planners helps reduce perceived risk.

Managing Capacity and Demand

• Shift demand through pricing strategies and reservations to maximize capacity without compromising service quality.

  • Pricing strategies include discounts during low demand and higher prices during peak periods.

  • Businesses must manage expectations for reservations to avoid under-utilization.

Overbooking

• Overbooking compensates for expected no-shows, but must be managed to avoid disappointing guests.

• Well-handled overbooking includes providing alternatives and compensating customers if necessary.

Revenue Management

• Focus on optimizing pricing strategies and utilizing data to adjust capacity and demand dynamically.

  • Revenue management began with yield management practices to maximize profits.

Using Queuing Techniques

• Manage queues effectively to ensure customer satisfaction during wait times.

  • Unoccupied time feels longer; entertainment or distractions can enhance the waiting experience.

Conclusion

• Successful hospitality businesses require comprehensive strategies to enhance customer satisfaction, manage resources, and maintain consistent quality amidst varying demand.